Logistics aims at the fulfillment of four basic requirements:
- Order fulfillment. It implies that the transaction between the supplier and the customer is being satisfied with the specified product provided in the agreed quantity.
- Delivery fulfillment. The order must also be delivered at the right location and at the right time. Both involve the scheduling of transportation and freight distribution activities.
- Quality fulfillment. The order must be provided intact (in good condition), implying that any form of damage must be avoided during transport and delivery. This is particularly important for products that are fragile, perishable, or sensitive to temperature fluctuations.
- Cost fulfillment. The final costs of the order, including manufacturing and distribution costs, must be competitive. Otherwise, other options will be considered.
All operations related to logistics aim to ensure that demand is satisfied (fulfilling goals), irrespective if it is a part made available to a manufacturer or a good be present on a store’s shelf. There are three major categories of logistics operations:
- Purchase orders processing. Operations related to the transactional procurement of goods.
- Inventory management. Operations related to the physical procurement of goods.
- Transportation. Operations related to the physical distribution of goods.